WEF YGL CircularEconomyInnovation PositionPaper 2013

8/13/2019 WEF YGL CircularEconomyInnovation PositionPaper 2013

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Young Global LeadersCircular EconomyInnovation & NewBusiness ModelsDialogue

Young Global Leaders Sharing Economy Dialogue Position Paper 2013


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World Economic Forum

2013 - All rights reser ved.

No part of this publication may be reproduced or transmi tted in any form or by any means,

including photocopying and recording, or by any information storage and retrieval system.

The views expressed are those of certain participants in the discussion and do not necessarily

reflect the views of all participants or of the World Economic Forum.

REF 081013


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3Circular Economy Innovation & New Business Models Dialogue

Table of Contents

3 Foreword

4 Context

5 How Did We Get Here and WhyNow?

6 What is the Sharing Economy?

6 A Brief History

6 Enablers and Parameters

7 Sharing Economy Systems, Modelsand Sectors

9 With or Without Money?

11 Longevity and Growth Potential: Isthe Sharing Economy Here To Stay?

12Public Innovation and Shareable

Cities13Collaborative Home

14Implications, Challenges andRecommendations: The PathForward

16Looking to the Future: EvolutionaryBusiness Models and theCollaborative Revolution

17 Recommendations for BusinessLeaders and Policy-Makers

17Recommendations for Business

and Private Sector Leaders17Recommendations for Policy-

Makers and Public SectorLeaders

18Key Questions

Foreword

The resource constraints that mark the global terrain havetaken a serious toll on the economic, political and socialdimensions on our lives. Humanity is challenged to

reconsider the use of assets, physical and otherwise, in newand innovative ways. Amid this reality, I am pleased to sharethis report, the insight in which offers a glimpse of a future-looking concept, namely an economy oriented towardsprofound collaboration and a new era of consumption.

At the forefront of this global movement are members of theWorld Economic Forums Young Global Leaders communitywho are committed to advancing the discussion and practiceof the sharing economy around the world. The YGL SharingEconomy Dialogue, launched in 2012 in conjunction with thecommunitys Circular Economy Dialogue, offers keen insightinto access over ownership and the reinvention of

traditional market behaviours such as renting, lending andswapping through technology. Through this process, thegroup is discovering new ways to create value, promoteeconomic efficiency, resource sustainability and community-building.

The group is currently determining how to take thismomentum forward, positioning the sharing economy at thecentre of the global agenda. This report serves as a notablestep in that direction.

David AikmanManaging DirectorHead of the NewChampions


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This paper seeks to place the sharing economy on the globalagenda for companies, governments, communities andentrepreneurs alike. It is presented by the World EconomicForum Sharing Economy Dialogue which is part of thebroader Circular Economy Innovation and New BusinessModels Dialogue.

The goal of this paper is to explain what the sharingeconomy is and why it holds potential, focusing on keyprinciples, drivers, trends and models. It maps out criticalfactors and conditions required for access-based businessmodels to scale up, and identifies both opportunities andpossible challenges to their success. It also embeds the

sharing economy within a larger context and movementfocused on resource efficiency, sustainability, changingdemographics and user behaviours.

The sharing economy represents one of several substantiveinvestigations by the World Economic Forum communityinto new disruptive business models that are impactingindustries, value chains and systems around the world. Itis intended to serve as an input to future World EconomicForum summits, sessions and engagements focused on thefuture of business, cities, technology, demographic shiftsand a variety of sector-specific verticals.

Circular Economy Innovation & New Business Models Dialogue

Context


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How Did We Get Here and Why Now?

1Mary Meeker 2012 Internet Trends report update: http://www.kpcb.com/insights/2012-internet-trends-update

The world is at an inflection point. Globally, economiesare strained as companies and governments alike seek todo more with less. Many natural resources are no longerplentiful, and some are at risk of exhaustion. Populationand urbanization continue to rise, more people are ageingwhile younger cohorts are also booming, and few cities areequipped to deal with what such changes will bring about interms of public services and community-building.

Meanwhile, digital technologies are enabling people toconnect directly with one another in all kinds of meaningfulways and with fewer intermediaries. Were also discoveringa large number of idle resources and underutilized assets

which could be put to better use. The Millennial generationis making it clear that they do not wish to inhabit a worldwhich is depleted of value and that, by and large, theywant to own less, be more connected with others and part ofsomething bigger than their individual selves. We are movingfrom an asset- heavy generation to an asset light lifestyle.1These trends are spurring massive innovation, creating newmarketplaces and redefining the nature of business.

This inflection point is unique. The world is faced with aconfluence of needs

frugal economics, environmental sustainability and loss of

community with a variety of enablers including technology, social

networks, and shifting cultural factors. Thanks toadvances in technology, this confluence is taking shapeon a scale thats unprecedented in history.

Against this backdrop, the sharing economy(also calledcollaborative consumptionand the collaborative economy)is gaining momentum in ways that potentially hold the keysfor the future. At a basic level, sharing is one of the oldestbehaviours known to humans. It is natural and intuitive;humanity has been doing it throughout history thanks to avariety of motivations.

When combined with the power of new technologies,particularly mobile platforms in todays global village,collaborative models of consumption, production andmarketplace creation

such as Airbnb, Etsy, TaskRabbit, RelayRides and manyothers

stand to reinvent and redefine these timeless behaviourson a scale and in ways never possible before.

The sharing economy is complementary to the circulareconomy. The circular economy refers to an industrialeconomy that is, by design or intention, restorative andwhich focuses on cradle-to-cradle principles and materialssustainability. Resources are used to enable high-qualitydesign without contaminating the biosphere.

Both the sharing economy and the circular economy focuson efficient and sustainable resource use by individuals,companies, and governments. This paper focusesspecifically on the sharing economy, while containing insightsthat are relevant for the circular economy and ecosystem aswell.


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A Brief History

The sharing economy represents one node of a muchbroader series of shifts underway dating back to theIndustrial Revolution and, much later, to the invention of theInternet. Just over 15 years ago, collaborative consumptionpioneers such as eBay and Craigslist launched, capitalizingon our newly found ability to use the Internet to matchmillions of haves with millions of wants, instantly andefficiently. People of all ages became empowered not just tobe buyers, but also sellers of thingsthrough the explosion ofpeer-to-peer (P2P) commerce. In so doing, they were able to

unlock the idling capacity the untapped social, economicand environmental value of underutilized assets that cannow be redistributed through technology platforms.Moreover, as well as being able to trade and exchangewith others online, people started to experience a differentrelationship to their material possessions, especially: thingsthat were more affordable to access (rather than ownoutright); things that were expensive to maintain; things theydidnt really want; or things that were used infrequently. Thishas resulted in a broader shift away from mass consumptionand an individual one- person, one-unit, one-purchase,must- own mentality.

About a decade ago, companies such as Zipcar startedto capitalize on the idling capacity of cars, which sit idleon average 23 hours per day, by developing new mobilityplatforms that charge for usage. Today there are hundredsof ways one can share different kinds of assets: space, skills,stuff and time. Companies now cater to everything fromaccommodation on Airbnb to office space on LiquidSpace,from cars on RelayRides and Getaround to pets onDogVacay, and from skills on SkillShare to travel experienceson Vayable. These companies are growing quickly: itis estimated that in 2013, more than US$ 350 billion inrevenues will be generated from transactions in the sharing

economy.2

In addition to these relatively new companies, there areseveral older types of companies and organizations such as libraries, cooperatives and neighbourhoodclubs that have a heritage of facilitate collaborativeconsumption and production. Many of these organizationsare experiencing increased membership and growth, andsome of them are among the largest employers worldwide.Collaborative models of consumption, production, andmarketplace creation exist across the value spectrum.


What is the Sharing Economy?

2http://www.forbes.com/sites/tomiogeron/2013/01/23/airbnb-and-the-unstoppable-rise-of-the-share-economy/

Enablers and Parameters

Rachel Botsman, co-author of Whats Mine Is Yours: TheRise of Collaborative Consumption and one of the principalthought leadersof collaborative consumption, outlines the sharing economyas driven by three primary benefits:

Economics:more efficient and resilient use of financialresources;

Environment:more efficient, sustainable and innovativeuse of natural resources; and

Community:deeper social and personal connectionsamong people

All of which are enabled and scaled by technology platforms.Technology provides the efficiency to match haves andwants seamlessly and economically, and the social glueto build trust between strangers (in both online and offlinesettings).

Collaborative consumption has been defined as thereinvention of traditional market behaviours renting, lending,swapping, bartering, gifting through technology, taking

place in ways and on a scale never before possible.3

Theparameters for its success are broad.Successful models are both monetized (such as Airbnb,which has booked more than 10 million nights and receivedUS$ 112 million in venture capital funding in 2012 on a US$1.2+ billion valuation; guests pay hosts a nightly fee) andnon-monetized (such as CouchSurfing, which has 5+ millionmembers around the world and is based on a cultureof reciprocity; no money exchanges hands directly, andinstead guests are expected to host fellow guests whenpossible). Both models tap into latent sources of value,create new value, build community and spur innovation.

Both are highly scalable, even though money does not flowin the same ways (if at all). Both are redefining the nature oftravel, tourism, community-building and business in a neweconomy.

3Rachel Botsman and Roo Rogers, Whats Mine Is Yours: The Rise of CollaborativeConsumption HarperCollins (2010) as featured in Forbes Magazine, 2013.


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Sharing Economy Systems, Models and Sectors

Within the sharing economy and collaborative consumption,there are three principal systems: 3

1. Redistribution Marketsredistribute things from wherethey are not needed to someone or somewhere theyreneeded.

Examples include eBay (auction site), Craigslist (local

classified ads), Swap.com and niche marketplacessuch as 99dresses (clothes), thredUP (childrensclothing), yerdle (various)

2. Product Service Systemsallow members to pay for the

benefit of using a product without needing to own itoutright.

Examples include Zipcar, Getable, Snapgoods,RelayRides, City CarShare, Velib, bicycle sharingplatforms

3. Collaborative Lifestyles platformsallow for the sharingand exchange of less tangible assets such as time, skills,money, experiences or space.

Examples include Skillshare, Airbnb, TaskRabbit,Lending Club, LiquidSpace, Vayable, time banks and

local exchange systems such as Sel du Lac

In addition to these three systems, there are a variety ofrelated models of collaborative production, transaction,investment and marketplace creation. Well-known examplesinclude Wikipedia (crowdsourced online encyclopedia), Kiva(crowdfunding for microenterprise), TechShop (hardwarehacker space) and Kickstarter (crowdfunding), and lesser-known variations such as Rang De, Milaap, and LendFriend(financing for friends and family).

Trust and reputation in the sharing economy

Trust and reputation are essential for the sharing economy.Trust is the social glue that enables collaborativeconsumption marketplaces and the sharing economy tofunction without friction. Reputation comes from the trustof people and develops over time as people interact in arepeated and consistent manner with one another.

People develop a feeling of trust based on their personalassessments of many factors. Trust operates on manylevels: inner-personal, relational, organizational, market, and

societal.

4

Reputation derives from observations and experiences overtime. We can work to manage reputation, but in the endour reputation comes from the judgments that other peoplemake about us. Various web-reputation systems havebeen built and analysed,5although there remain significantopportunities for such platforms and networks to evolvewithin and for the sharing economy specifically.

4Kaliya Hamlin, The Trouble with Trust and the Case for Accountability Frameworks:http://www.identitywoman.net/the-trouble-with-trust-the-case-for- accountability-frameworks5Christopher Allen, Life with Alacrity Collective Choice Rating System:http://www.lifewithalacrity.com/2005/12/collective_choi.html and Randy Farmer,Building Web Reputation Systems:http://shop.oreilly.com/product/9780596159801.do


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8 Circular Economy Innovation & New Business Models Dialogue

The Sharing Economy Universe.

Source:Whats Mine is Yours: The Rise of Collaborative Consumption . HarperCollins (2010) as featured in Forbes Magazine, 2013

Depending on a companys goals, they may wish tomonetize their business model in a variety of ways includingservice fees, membership and/or subscription fees, and flator tiered usage fees. Crowdfundingsites may provide a financial return, social return, or aproduct or service in exchange for investment.6

6http://www.slideshare.net/NESTA_UK/rachel-botsman-purpose-with-profits


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With or Without Money?

It is important to keep in mind that not all organizations thatenable sharing may ask for participantsto transact using money. In a non- monetized setting, valueis often tracked and exchanged using systems of points orcredits instead.Systems such as time banks or local exchange tradingsystems use such an approach. They may generate incomethrough fees, advertising, or even brokering exchanges, butmany rely on voluntary contributions of time and funds fromthose that support the practice of moneyless sharing. Keyto their growth is the availability of free open source softwareso that the cost of establishing and running such systems islow. The potential of such systems is that participants abilityto share is not restricted by how much money they have.7

All of these systems both monetizable and non-monetized are enabled in turn by four key principles that enable theirexistence and growth:

Trust between strangers; Belief in the commons, and effective management of

common resources;

Idling capacity; and

Critical mass of users, customers, consumers, producersand/or members

Over time, there has been an evolution in the variety ofsharing economy business models. There are two mainmodels: business-to-consumer (B2C) and peer-to-peer(P2P). Zipcar is an example of a B2C company; the companyowns the inventory and coordinates access to it through

technology. RelayRides and Etsy are examples of P2Pcompanies; the company never produces, owns or maintainsthe inventory thats shared. They simply facilitate thetransaction, which takes place directly between individuals.With P2P sharing platforms, people who have an asset (car,home, skill, etc.) can put it into shared use and offer it topeople who are looking for that asset. Exchanges increasethe use of the asset, offset the cost of owning it, and doso while consuming fewer resources and promoting localentrepreneurship.

Although still fewer in number, business-to-business (B2B)

models of collaborative consumption also offer growthopportunities. In a B2B setting, a company provides aservice to another company (usually online) to enable them toshare their inventory, are increasing. Companies like Getableand LiquidSpace provide examples of how businesses mayrethink their approach to B2B transactions.

The sharing economy can be manifest in almost every sectorof society and corner of the globe. Sectors which haveexperienced robust traction and interest includeaccommodation, transportation, tourism, office space,financial services and retail products. Areas where significantgrowth is expected include P2P car sharing, ridesharing,

errand marketplaces, P2P and social lending, and productrental.7Bendell, J. and T. Greco (2013) Currencies of Transition, in McIntosh ed. (2013) TheNecessary Transition, Greenleaf Publishing. http://www.greenleaf- publishing.com/content/pdfs/TNT_bendell.pdf

Crowdfunding and the sharing economy

As the name implies, crowdfunding refers to a new andquickly growing form of financing in which individuals canfund projects, products and causes on a peer-to-peerbasis facilitated by digital technology. A variety of types ofcrowdfunding sites are available; Kickstarter, Indiegogo,Crowdrise and RocketHub are some of the larger platforms,

although new entrants are arriving in new geographiesfrequently. Each platform provides unique terms and/orfocuses on a unique target market. Pending the JOBS Actimplementation (see below), equity crowdfunding for afinancial return will also be feasible.

Use of crowdfunding as a financing mechanism is growingdramatically. In 2011, a total of US$ 1.1 million was raisedon a handful of crowdfunding sites. By the end of 2012this number had risen to US$ 2.7 billion across nearly 600platforms and more than a million campaigns across theglobe. In 2013 the rate of increase is expected to be evenhigher.

In the United States, the Jumpstart Our Business Startups(JOBS) Act was passed by President Obama on 5 April2012. It provides limited exemptions from securitieslaws which permit a small business to raise up to US$ 1million per year via crowdfunding. The JOBS Act has beenheralded as a step in the right direction to new formsof P2P and democratized fundraising structures, though theSecurities and Exchange Commission (SEC) has yet to passthe necessary rules for its implementation.


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The Complete Picture.

Source:Whats Mine is Yours: The Rise of Collaborative Consumption . HarperCollins (2010)

Generally speaking, collaborative consumption businesseswork best when they meet certain criteria:

It is important for the asset to become liquid, i.e. easy

to share and/ or distribute; this is typically the case forspaces and skills.

It is also particularly good when the asset has high idlingcapacity, i.e. low frequency of use, such as cars or sparespaces (commercial and residential).

Assets that are correlated with a high percentage ofincome outlay or are expensive to own outright, suchas solar panels and luxury goods, due to potential costsavings and/or income limitations.

Assets that quickly become obsolete, such as babygoods and maternity- related clothing and products.

Assets that have no demand or supply limitations, orwhose value increases because of the fact it is shared


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Longevity and Growth Potential:Is the Sharing Economy Here To Stay?

The sharing economy continues to grow at almostbreakneck speed, though its course is still early. Total ventureinvestments in collaborative consumption startups toppedUS$ 431 million in 2012, continuing an upward trend datingback to 2007.

Over ten million nights have been booked on Airbnb. TheP2P financial lending market is estimated to reachUS$ 5 billion by the end of 2013,8and car sharing revenuesin North America alone will hit US$ 3.3 billion by 2016.9The global P2P rental market is valued at US$ 85 billion,the vacation rental market is valued at US$ 85 billion, andthe ride sharing industry is valued at US$ 117 billion. From

an economic perspective, collaborative consumption lookspromising.In addition, big brands and established companies arebeginning to understand the drivers and demographic

8Gartner Group Banking and Investment Services Press Release http://www.gartner.com/newsroom/id/1272313(Jan. 5, 2010).9Frost & Sullivan industry report, Carsharing: A Sustainable and Innovative Personal

Transport Solution with Great Potential and Huge Opportunities (2010).

shifts underway and entering the sharing economy. Theyare doing this in a variety of ways. In January 2013, Zipcarwas acquired by Avis for US$ 500 million. General MotorsVentures has invested in RelayRides. BMW has DriveNowand Daimler launched Car2Go; both are carsharing servicesfacilitated through mobile technology (and in some casesfocused on electronic vehicles). Amazon offers textbookrental services. Walmart recently announced its own white-label P2P delivery service. Large companies are looking atcrowdfunding as a source of innovation capital, and someinsurers are developing new forms of insurance to coversharing-based transactions.

What is at play in the sharing economy, however, goesbeyond basic economics. Aside from these benefits,the sharing economy is also part of a larger processaround value creation in the new economy: valuethat is environmentally sustainable and connected tolocal economies. The sharing economy enables localentrepreneurship and local economic investment, becausetransactions accrue value at the point of use. As a result,sharing-based business models hold huge potential for


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The sharing economy provides myriad avenues for publicinnovation and benefits for the public sector as a whole.Examples include Landshare, Good Gym, Southwark Circle,city-sponsored bike sharing programs and a varietyof open government data initiatives. Cities are arguably thelargest single beneficiary, as collaborative consumption andtechnology can help redefine public services, infrastructureand civic engagement.Imagine a shareable city. It could be a city in which carsharing were the norm, thereby reducing traffic and pollutionwhile freeing up space and disposable income for everymember of the community. Or a city in which office spaces

were more widely accessible, matching mobile workers withappropriate space and enabling people with space to boosttheir revenues simply by sharing this underutilized asset. Ora city in which residents can teach each other valuable skills,help with projects or even run errands saving money, usingresources responsibly and connecting with one another inthe process. Cities that can take advantage of platformsavailable for collaborative consumption will tap into vast newopportunities to create jobs, attract talent, promote localinvestment and community-building, and offer a healthierplace to live.

Local and national governments have unique roles to play to

understand the opportunities available and promote modelsthat use resources more efficiently. Many governments todayare not even aware that the sharing economy exists, andeven when they do, they are uncertain about how to navigateit best. It is critical to get public sector engagement to ensurean appropriate enabling environment for new businesses tothrive.


Public Innovation and Shareable Cities

In addition to start-up companies in the sharing economy,established companies can be key promoters of businessinnovation. Although some traditional and large businessesmay feel threatened by collaborative consumption drivers including companies built on an ownership economyand those that depend on frequent, disposable purchases they are nonetheless looking at a future of changingdemographics and consumer preferences. For example,General Motors partnered with P2P car sharing serviceRelayRides and GMs OnStar division to enable car rentersto unlock GM cars (rented on RelayRides) with their mobilephones.

No amount of marketing will force a customer to buysomething that can be shared. Rather, smart companies and progressive governments will embrace the sharingeconomy and integrate it into their business lines andcommitment to local citizens.

In addition, companies and organizations in the sharingeconomy are experimenting with new metrics for enablingtrust and exchange. These innovations raise new possibilitiesfor how low income individuals or businesses with cash flowdifficulties may find new means by which to exchange goodsand services effectively trading without money. Thereforethe sharing economy provides new opportunities for enabling

local economic development and even poverty reduction,underscoring its relevance and potential for communities andbusiness in myriad markets around the world.


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Collaborative home

Take a look around you. Do you have a spare room that sitsempty for most of the year? Perhaps you are like the averagecar owner whose vehicle sits idle for 22 hours a day. We aresurrounded by spaces, skills, time, gardens, and stuff thatall have idling capacity. With more and more collaborativeconsumption marketplaces launching, we can now swap,barter, rent or share these assets.

Source:Collaborative Lab.


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The sharing economy holds great promise. This implies amore sustainable future, efficient asset utilization, strongersocial and community ties, new marketplace creation forproducts and services that never had a market before, andan expanded definition of work and entrepreneurship.

However, alongside these potential advantages comechallenges, potential pitfalls, and calls to action. The sharingeconomy could unravel for a variety of reasons, all of whichare surmountable.

The key areas that impact sharing economy prospects, andtherefore where thoughtful and concerted action is most

important, are: Marketplace creation and critical mass:for sharing

economy companies to succeed, it is essential that theyhave enough people to participate and enough supplyand demand to provide convenience and choice. Thisis typically easier to overcome in large cities, whichhave higher population densities and more assets toshare. However, for collaborative consumption to gomainstream, platforms should be available in smallercities as well.

Legal, regulatory and policy issues:Many existing

public policies and laws can help or hinder the sharingeconomy. Equally important, many policies drafted in theownership era are silent about sharing creating a grayarea in which activities are neither legal nor illegal. Todaythe most contentious issues focus on taxation, insurance,zoning and licensing, and consumer protection (includingpersonal data) issues. In order to realize the full potentialof these new business models, it is recommendedto develop a parallel and complementary set of rulesfor affected companies. In addition, many cities haveimplemented or are considering implementing SharingEconomy Working Groups to navigate this new territory.Enlightened city leaders can champion this charge.

Designing for sharing:This has multiple implications forcompanies including product development

and servicing, branding, marketing, customer loyalty,innovation strategy and technology investment. It alsorequires enabling inter-operability of platforms andportability of data, including relationships. One can easilyimagine a car or appliance that has been specificallydesigned to be shared rather than owned outright; itdoes not require developing an entirely new product,but it does require thoughtful modifications and a focuson durability, sharing logistics, and Cradle-to-Cradleprinciples. For example, one could imagine a digital birth

certificate for products in shared use.


Implications, Challenges andRecommendations: The Path Forward

Seoul, South Korea: The self-proclaimed sharing city

The Seoul Metropolitan Government has declared theSharing City as a new city paradigm. On 20 September2012, the government disclosed its plan for promotingthe Sharing City Seoul project, which includes 20sharing programs and policies for generating or diffusinginfrastructure to promote and enable sharing-basedplatforms.

The government believes that focusing on models topromote sharing provides a new alternative for reform that

can resolve many economic, social, and environmentalissues of the city simultaneously by creating new businessopportunities, recovering trust-based relationships, andminimizing wastage of resources.The government has identified several roles it will play inthe development of infrastructure for sharing companies,supporting companies and non- profit organizations,spreading participation by citizens, and prioritizing certainprograms focused on transportation, welfare, culture and theenvironment.

Following through on its declarations, the Seoul Metropolitan

Government passed Act No. 5396 (Act for PromotingSharing) on 31 December 2012.

Personal data and identity: Companies must also addresspersonal data identity concerns and acknowledge that,in many cases, it is no longer about selling the products(or stuff) and shift their focus to providing ecosystemservices to support the sharing, maintenance andfunctionality of these items.

Cultural barriers:Sharing economy models will thrivewhere there is an attitude that deems sharing andcollaboration to be acceptable and even preferableto ownership or outright competition. This requires amindset thats aware and open to this kind of innovation,prioritizes resource efficiency, and understands thelimitations that the world faces today. There are potentialcultural barriers, for example, in developing countries witha rising middle class whose goal is to own (a car, home,motorbike, etc.) outright. Particularly in megacities in thedeveloping world, these aspirations must be balancedagainst the environmental and social pressures that standto limit the well- being of the same communities.

Incumbent backlash: Given collaborative consumptionspotential to disrupt existing industries and ways of doingbusiness, it is important for established companies tounderstand what their options are and how best to react.There are two typical reactions.


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How to accelerate the sharing economy: open standardsfor personal data and opportunities to accelerate thesharing economy

The computers in our pockets and data in the cloud areenabling the growth of the sharing economy. Personalclouds are emerging for people to store their personal data.This personal data has been identified by World Economic

Forum as a new asset class.10This asset including social graphs the history of sharingtransactions, and the data about what individuals have thatthey can share (e.g. things, time, skills) is a key componentof a new economy that harnesses new sources of value.

In this context, services which use open standards to accesspersonal data clouds will have an advantage over servicesbased on proprietary standards and walled gardens.Adopting openstandards supports people to provide information in acommon format. Practically speaking this is what SMTP

does for e-mail and HTML does for web pages.

With open standards in the sharing economy, people canconnect with multiple sharing networks without having to re-enter all of their data. This makes it easier to build onlinereputation and credibility, which helps to build and scale userbases, and it enhancing user choices rather than creatingchoice barriers.

10World Economic Forum Rethinking Personal Data Project http://www.WorldEconomic Forumorum.org/issues/rethinking-personal-data

In the first case, companies see the disruption and, ratherthan ignoring it or trying to shut it down, they embrace thepotential for innovation and begin to engage: in other words,they show some willingness to disrupt themselves. A goodexample of this is the automotive industry. Traditional carmanufacturers have partnered with car sharing companies(GM and RelayRides) and developed their own car sharinginitiatives (BMW, Daimler), while ride sharing services canwork with taxi cab companies to maximize utilization of

unused cabs (Uber). They have begun to look at a futurein which customers are more interested in having accessto mobility services than owning a car, and developingofferings accordingly.In the other case, established companies have been usingcollective efforts to outlaw sharing economy-focused andP2P models. The hotel industry falls into this category.They often focus on issues such as taxation of residents orinstituting minimum stay requirements for people using P2Paccommodation platforms (which would not apply in a hotelsetting). These efforts tend to be highly reactive and focusedon short- term unknowns, rather than looking at long-term

cues and drivers of why people opt into P2P platforms suchas proximity, accessibility, affordability, and uniqueness ofthe asset.


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The sharing economy seeks to tap into and unlock idleassets in order to create new wealth and use resourcesmore sustainably. It is part of a broader series of trendsrelated to collaborative consumption, production, supplychain management and more that stand to evolve andrevolutionize the way business is conducted around theworld.

The adoption of sharing economy principles, systems anddrivers has the potential to reshape business models andcreate valuable opportunities for companies large andsmall, start-up and established who can understand andharness the advantages available. Moreover, they are better

for an individuals pocketbook, better for the environment,and better for local communities. Companies who do notrecognize the magnitude and potential of these opportunitiesstand to miss one of the greatest inflection points of ourtime. Public and city leaders have a key role to play in the fullrealization of what the sharing economy could become forsustainable and shareable cities everywhere.


Looking to the Future: Evolutionary BusinessModels and the Collaborative Revolution


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Recommendations for Business Leadersand Policy-Makers

Recommendations for Business Leaders and Policy-MakersThere are many ways that business leaders and policy-makers can learn about and get meaningfully involved in thesharing economy. The first step is understanding the driversand principles that enable new business models and ways tocreate value to evolve.

The recommendations below are intended to serve asguidelines for more robust discussions within both public andprivate sectors. The YGL Sharing Economy Working Groupwelcomes further input and seeks to identify opportunities forcollaboration within the World Economic Forum community.

Recommendations for Business andPrivate Sector Leaders Better understand the potential effects of collaborative

consumption models on our core sector/vertical andbusiness line(s)

How could access-based business models either

threaten or enhance our core business?

How could sharing better engage employees, clients,and other partners in the communities and markets

we serve? Is it possible to use sharing business models to

stimulate and shape new opportunities and demandfor new services?

What are the opportunities for P2P, B2C and B2B?

Understand lessons and insights that incumbents have

already learned, such as focusing on underlying driversaffecting why people opt for collaborative consumptionmodels:

Access (ease and facility)

Greater choice and flexibility (uniqueness of assets) Affordability

Opportunities for human interaction and relationshipbuilding

Sustainability (environmental benefit)

Better understand the attractiveness, rationale and

diversity of collaborative consumption funding options forinvestors and entrepreneurs

Venture capital and private equity

Crowdfunding and other P2P financing platforms

Economic development agencies

Potential new opportunities for financial institutions

Seek partnerships and joint ventures that enableleveraging of assets, inventory and expertise in ways thatpromote additional innovation

Investigate non-monetary value creation, resilience

strategy, and non-monetary and other qualitativeperformance metrics

Recommendations for Policy- Makersand Public Sector Leaders

Identify opportunities to create and promote a ShareableCity

- Commission a study of idle assets within your city

- Launch a sharing economy working group to Identifyopportunities for collaborative consumption modelsto redefine public services, innovation and civicengagement

- Look at new ways to utilize government assets (e.g.space, land) for shared use

- Establish shareable infrastructure

- Promote mechanisms to bring members ofthe sharing economy together (residents,neighbourhoods, company and community leaders,etc.)

Work with policy-makers and municipal agencies todevelop and implement appropriate legal and regulatorymechanisms for access- based and collaborative formsof business, consumption, production and exchange

- Ownership-based rules are often outdated and/orawkward for access-based transactions

- Focus on developing a robust enabling environmentfor the sharing economy to grow

Collect data on consumption and waste patterns withinthe city or region, which gives a foundation for companiesto build business models and attract funding


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What impacts might the adoption of sharing economyprinciples, systems and models have on my business andindustry? What about on the place (neighbourhood, city,country) where I live?

How might insights and trends from the sharing economybe incorporated into my organization? What capabilitiesdo we need to better understand the opportunities (andpotential challenges) we face?

How could our business, or our local government:

- Fold sharing-based business models into what we

do?- Communicate this impact to key stakeholders,investors, and communities where we work?

- Engage employees, clients, and other partners intothe sharing economy?

- Stimulate and shape new opportunities and demandfor new services?

- Shape or respond to a regulatory environmentconducive to the sharing economy and collaborativeconsumption/ production business models?

What could I do to become involved in the World

Economic Forum and YGL Sharing Economy Dialogue ina practical way?

- We would greatly appreciate any feedback, commentsand contributions to this paper, as well as expressionsof interest from those keen to play an active role in thedevelopment of a broader sharing economy agenda.


Key Questions


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Author & Sharing Economy Dialogue LeadApril RinneChief Strategy Officer | Collaborative Lab

Supporting AuthorsYGL Sharing Economy Dialogue in collaboration withCollaborative Lab.

April would like to particularly thank the following for their

contributions and insights.

Lauren AndersonJem BendellRachel BotsmanPrivahini BradooDavid ChiuRossanna FigueraKaliya HamlinKate HamptonPooja JainJerry MichalskiJames Moody

Kohei NishiyamaJulia Novy-HildesleyKristin D. RechbergerLucas SimonsAdam WerbachPeter WrtenbergerSharing Economy DialogueThe Sharing Economy Dialogue was founded in 2012 byYGLs who see it as an important example of business andbehaviour that promotes sustainability at scale, innovationand resilience across sectors and geographies. It is closelyintegrated with the Circular Economy Innovation and NewBusiness Models Dialogue, and it is expected to lead toadditional workflows and synergies over time. The leadersof these dialogues are committed to collaboration andprogressive thinking together.

In addition, the Sharing Economy Dialogue has partneredwith Collaborative Lab to source the information and dataprovided in this paper. Collaborative Lab is a strategicadvisory firm that works with companies, governments andentrepreneurs interested in understanding and harnessingthe potential of the sharing economy.

As the Sharing Economy Dialogue continues to team withthe Circular Economy Dialogue and Collaborative Labto build on the work of the last year, we would greatlyappreciate feedback, comments and contributions to thispaper, as well as expressions of interest from those keen toplay an active role in the development of a broader sharingeconomy agenda within the World Economic Forum.

Circular Economy Innovation and New Business ModelsDialogueThe vision of this YGL dialogue is to create a sociallyand environmentally prosperous world where profitablebusinesses provide smart goods and services within theresource limits of the planet.

Our mission is to inspire leaders to embrace the CircularEconomy business philosophy for their organizations and

provide tangible examples of successful business modelsand means of implementation.

By advancing this mission the dialogue helps createuniversal awareness amongst business leaders and otherstakeholders of the inherent problem of unsustainable linear production methods; the case for and possibilityof change; the business opportunities; and means oftransitioning to a sustainable global economy.

Dialogue Co-ChairsPeter LacyManaging Director | Strategy & Sustainability APAC,

Accenture

David RosenbergCo-Founder and Chief Executive Officer | AeroFarms

Dialogue Managers & Key ContactsQuentin DrewellManager | Strategy & Sustainability, [email protected]

Jakob RutqvistManager | Strategy & Sustainability, [email protected]

We would also like to give special thanks to Eric Roland forhis unfailing support and work in the background in helpingmake the Dialogue a powerful agent for change.


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The World Economic Forumis an independent internationalorganization committed toimproving the state of the worldby engaging business, political,academic and other leaders ofsociety to shape global, regionaland industry agendas.

Incorporated as a not-for-profitfoundation in 1971 andheadquartered in Geneva,Switzerland, the Forum istied to no political, partisanor national interests.

World Economic Forum9193 route de la CapiteCH-1223 Cologny/GenevaSwitzerland

Tel.: +41 (0) 22 869 1212Fax: +41 (0) 22 786 2744

contact@weforum org

WEF YGL CircularEconomyInnovation PositionPaper 2013

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